Liga Asuransi – The world of insurance is always interesting to discuss, because insurance is not only limited to vehicles and life, especially for business protection coverage, insurance still has a very wide reach. In the third week of November 2023, we are again collecting 7 selected news related to insurance that are good for you to know.
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Achievement of Insurance Premium Collection in the Malang OJK Area Reaches IDR 1.84 Trillion
In the first half of 2023, the insurance sector in Indonesia recorded premium income of IDR 1.84 trillion, although it experienced a slight contraction of 0.02 percent compared to the same period the previous year. Sugiarto Kasmuri, Head of the Malang OJK Office, revealed that pension funds also experienced significant growth, with assets increasing by 10.53 percent year over year (yoy) to IDR 226 billion as of September 2023.
In the sector of financial institutions, venture capital companies, microfinance institutions and other financial services institutions, growth in financing receivables remains high, reaching 10.61 percent yoy in September 2023. However, the non-performing financing (NPF) ratio shows a decline to 28 percent, compared to 30.35 percent in August 2023.
Interestingly, since the enactment of Law Number 1 of 2013 concerning Microfinance Institutions (LKM), until the end of the third quarter of 2023, there are six LKMs that have obtained business permits in the OJK Malang work area, consisting of four PT LKMs and two LKM Cooperatives. In terms of type of business activity, there are four conventional MFIs and two sharia MFIs.
Economist from the Faculty of Economics and Business, Brawijaya University, Joko Budi Santoso, assessed that the insurance, guarantee and pension fund sectors are still experiencing relatively slight contractions. He stated that this was understandable because society prioritized investment in an effort to support economic recovery.
With the dynamics occurring in the financial sector, challenges and opportunities are wide open. The slight contraction in the insurance and pension fund sectors can be seen as a signal that society is more focused on efforts to recover the economy through investment. However, the improvement in the NPF ratio in financial institutions shows the resilience of this sector in facing risk. Meanwhile, the growth of MFIs, both conventional and sharia, indicates diversification and inclusiveness in microfinance services in the OJK Malang working area.
Thus, the Indonesian financial sector in the first half of 2023 shows complexity and dynamics that need to be monitored. Challenges such as slight contraction need to be balanced by exploiting opportunities, such as the continued growth of microfinance institutions. Innovation and wise strategies from policy makers can be the key to optimizing the potential of the financial sector in the future.
Insurance and Reinsurance Build a Resilient Financial Foundation in Risk Management
In the financial industry, insurance and reinsurance play a crucial role in risk management. Although both are closely related to the concept of protection, the fundamental differences between them form the foundation of these two elements.
Insurance: Direct Protection for Policyholders
Insurance can be considered as a contractual agreement between the policy holder (customer) and the insurance company. In this agreement, the policyholder pays a premium in exchange for financial protection provided by the insurance company against certain risks.
For example, in the context of health insurance, the insurance company will cover some or all of the costs of medical treatment in accordance with the provisions of the policy owned by the policy holder.
Reinsurance: An Additional Layer for Insurance Companies
On the other hand, reinsurance involves insurance companies transferring a portion of the risks they assume to reinsurance companies. In this scenario, the primary insurance company is known as the ceding company, while the company that provides additional coverage is known as the reinsurer. Reinsurance plays a role in helping insurance companies manage risks greater than they can bear on their own.
Key Differences: Focus and Scope of Risk
The main difference between insurance and reinsurance lies in their primary focus. Insurance operates directly with policyholders, providing protection to individuals or businesses. In contrast, reinsurance is more concerned with insurance company risk management, especially in understanding and handling large amounts of risk or complex risks that may be difficult for a single insurance company to understand or measure.
Benefits of Reinsurance: Diversification and Financial Stability
Reinsurance provides significant benefits for insurance companies. By transferring a portion of the risk, insurance companies can achieve better diversification, reduce the potential for large losses, and increase their capacity to cover complex risks. In addition, reinsurance provides financial stability, especially in the face of natural disasters or other major events that can give rise to large claims.
Thus, although insurance and reinsurance are interrelated, both have their respective roles and responsibilities in creating a safe and stable environment in the global insurance industry. Insurance provides direct protection to individuals and businesses, while reinsurance helps insurance companies manage risk effectively, creating a solid financial foundation in the face of complex challenges.
PT Reinsurance Indonesia Utama’s Brilliant Performance, Net Profit Increases Sharply to 152.7%
PT Reinsurance Indonesia Utama (Persero), known as Indonesia Re, recorded an extraordinary achievement by posting a net profit of IDR 53.9 billion as of October 2023. This figure shows significant growth, jumping 152.7% compared to the same period the previous year , which only reached IDR 21.3 billion.
Reporting from the company’s official website on Tuesday (11/14/2023), this net profit achievement was driven by underwriting results which reached IDR 78.5 billion. This underwriting performance experienced a striking increase of 452.9%, compared to IDR 14.2 billion in October 2022 (year-on-year/yoy). Even though there was a decline in several figures, the underwriting income for October 2023 turned out to be superior to the total expenses faced.
Underwriting income in October 2023 reached IDR 1.66 trillion (yoy), while underwriting expenses reached IDR 1.58 trillion (yoy). In October 2022, these two figures will only be IDR 2.48 trillion and IDR 2.465 trillion.
Not only that, the amount of premium income in October 2023 also increased by 1.48%, reaching IDR 4.91 trillion compared to the previous year which reached IDR 4.84 trillion (yoy).
Based on financial reports, the company’s assets as of October 2023 reached IDR 12 trillion, an increase of 13.9% compared to October 2022 which amounted to IDR 10.5 trillion. This increase in assets was influenced by factors such as investment in Government Securities (SBN) amounting to IDR 1.45 trillion and investment in reinsurance assets amounting to IDR 2.93 trillion.
Even though Indonesia Re’s equity decreased by 2.1% to IDR 2.59 trillion (yoy), the company’s financial health level, as measured by Risk Based Capital (RBC), reached 136.68%, up from 129.86% in October 2022 This figure remains above the threshold set by the Financial Services Authority (OJK), namely 120%.
Meanwhile, the company’s liquidity ratio and investment adequacy ratio reached 132.54% and 135.75% respectively. The ratio of expenses to net premium income was also maintained at a good level, reaching 108.48%.
This brilliant achievement shows that Indonesia Re has succeeded in maintaining financial stability and healthy growth, providing confidence to stakeholders and the insurance industry as a whole.
Asei CEO Projections Anticipate Premium Opportunities Related to IKN Projects
The monumental project for the development of the National Capital City (IKN) of the Archipelago in Indonesia is believed to have a significant impact on business growth in the engineering insurance sector. Achmad Sudiyar Dalimunthe, President Director of PT Asuransi Asei Indonesia, is optimistic that the increasing development focus in IKN will create large business opportunities. Dody, his nickname, revealed that a high investment value indicates significant potential risk, and insurance companies can play a crucial role in dealing with damage or failure that may occur.
Some of the insurance products offered for IKN projects include project guarantees (surety bonds), engineering insurance (engineering insurance), transportation insurance (marine cargo insurance), property insurance (property insurance), and personal accident insurance (personal accident insurance). Dody emphasized that engineering insurance will experience an increase in premiums, while insurers need to carry out careful risk surveys considering the location of the new IKN project.
However, challenges also arise in the engineering insurance business line, especially regarding the availability of adequate capacity. Dody said that the relatively large insurance value was one of the obstacles, especially because the reinsurance market was still experiencing hardening conditions.
On the other hand, Christopher Pangestu, President Director of Astra Insurance, stated that engineering insurance is not the main focus of the company’s growth even though it still supports this business segment. Astra Insurance’s main focus remains focused on automotive, health, heavy equipment and property. Nevertheless, he acknowledged that the contribution of engineering insurance cannot be ignored.
Looking at the projections of the Indonesian General Insurance Association (AAUI), it is predicted that the engineering insurance business line will experience significant growth in the 2024 political year. Heddy Agus Pritasa, Deputy Chair of AAUI Member & Institution Cooperation, stated that there is support for the IKN project from the presidential and vice presidential candidates. 2024 will be a growth driver. AAUI data notes that engineering premiums in general insurance experienced growth of 38% on an annual basis (year-on-year/yoy) in semester I/2023.
With significant growth potential, the engineering insurance business line is in the spotlight amidst the challenges of capacity availability and tough reinsurance market conditions. As a sector that supports large projects such as IKN, the role of engineering insurance is expected to provide optimal protection and contribute to the success of national infrastructure development.
OJK Encourages the Use of Insurance and Guarantees in Fintech P2P Lending
The Financial Services Authority (OJK) has firmly stated that every provider of fintech P2P lending or online loans (pinjol) needs to facilitate risk transfer through insurance or guarantees to reduce the risk of default in the pinjol industry. Agusman, Chief Executive for Supervision of Financing Institutions, Venture Capital Companies, Microfinance Institutions and Other Financial Services Institutions at the OJK, emphasized that efforts continue to be made to strengthen the role of insurance and guarantees in supporting the sustainability of fintech P2P lending. At a press conference in Jakarta, Agusman stated that insurance and guarantees for online loans should be sourced from external parties or through partnerships to avoid the impact of internal risks on online loan organizers.
This step is in line with the loan risk mitigation provisions regulated in OJK Circular Letter (SEOJK) Number 19/SEOJK.06/2023 concerning the Implementation of Information Technology-Based Joint Funding Services (LPBBTI). In accordance with these regulations, fintech P2P lending providers can transfer funding risks through insurance or guarantees, by collaborating with insurance or guarantee companies that have obtained business permits from the OJK. This collaboration is described in detail in a written agreement, and involves at least two insurance or guarantee companies, while the organizer acts as a provider of collaboration facilities for funders.
OJK explains that the use of insurance or guarantees is the result of an agreement between the funder and the insurance or guarantee company. In this role, the funder acts as the insured or recipient of the guarantee. The claim payment process will be carried out directly by the insurance or guarantee company to the funder and/or beneficiary. After the claim is paid, the organizer is obliged to ensure that the claim payment information is submitted to the funder. In the context of risk transfer related to the collateral object, the organizer can insure the collateral object or collaborate with other parties who have the authority to accommodate or store the collateral object in accordance with the provisions of statutory regulations.
Shares of PT Asuransi Tugu Pratama Indonesia (TUGU) Strengthened 3.26% After Increasing Ownership by the President Director
Share price of PT Asuransi Tugu Pratama Indonesia Tbk. (TUGU) or Tugu Insurance experienced an increase of 3.26% at the close of trading today, Wednesday (15/11/2023), marking a trend reversal after a period of weakness over the last three months. TUGU shares closed at IDR 1,110, ending the decline phase after reaching a high of IDR 1,340 per share at the end of last October and then declining to reach IDR 1,065.
The positive sentiment that influenced the increase in TUGU’s share price today came from the announcement by the President Director of PT Asuransi Tugu Pratama Indonesia Tbk., Tatang Nurhidayat, who increased his ownership in the joint venture insurance company PT Pertamina (Persero) with UOB Kay Hian and Samsung Fire & Marine Co.
Tatang Nurhidayat was recorded as having purchased 42,700 TUGU shares through four consecutive transactions. This action was carried out in the period 6 November to 9 November 2023, with an average purchase price of IDR 47.88 million. Tugu Insurance Corporate Secretary, Rudy Samudra, said that the transaction had an investment objective with direct ownership status.
Tatang’s transaction details include the purchase of 20,000 TUGU shares on November 6 2023 at a price of IDR 1,130 per share, followed by additional ownership of 12,200 shares the following day at a price of IDR 1,122 per share. On November 8 2023, Tatang again bought 2,000 TUGU shares at a price of IDR 1,100 per share, and finally, increased his ownership by 8,500 shares on November 9 2023 at a price of IDR 1,105 per share.
With this addition, Tatang Nurhidayat currently owns 100,700 TUGU shares, equivalent to 0.0028% of the shares. This shareholder experienced a floating loss of IDR 21 per share, referring to the last purchase price. This position reflects Tatang’s decision to strengthen his position within the company and provides optimism regarding TUGU’s share performance in the future.
Allianz Syariah Expands Targeting Premium to Micro Segments to Maximize Protection
PT Asuransi Allianz Life Syariah Indonesia (Allianz Syariah) has established an expansion strategy that targets all market segments, from premium, medium to micro. In this effort, the Main Director of Allianz Life Syariah Indonesia, Achmad K. Permana, emphasized that premium products will be more focused on unit link products. His party is committed to ensuring that customers who buy this product have a deep understanding in accordance with the directions of the Financial Services Authority (OJK).
Achmad explained that unit link products will be aimed at the upper middle segment, while traditional products will be more focused on the middle and micro segments. Even though unit links currently dominate 85% of Allianz Life Indonesia’s insurance products, the company plans to increase the portion of traditional products next year.
The main focus for traditional products is microinsurance, with the belief that even though the premiums generated are not large, microinsurance has the potential to reach more customers. Allianz Syariah plans to collaborate with banks to support micro-insurance penetration.
Achmad highlighted that, although the premiums generated from microinsurance may not be significant, the number of customers that can be accommodated reaches 9 million. He emphasized that his party sees this as a mission to provide protection to all segments of society.
In the third quarter of 2023, Allianz Syariah recorded Annualized Premium Equivalent (APE) growth of 47%, with a market share reaching 22.8%. This growth is supported by two main distribution channels, namely agency and bancassurance. During the same period, Allianz Syariah has also distributed total insurance compensation (claims) and benefit payments amounting to IDR 890 billion, of which 61% of this amount is insurance compensation or claims, reflecting the principle of mutual assistance between sharia insurance participants. With more than 120,000 individual participants and 9 million microinsurance participants, Allianz Syariah continues to strive to expand the reach of its protection to all levels of society.
This article is brought to you by L&G Insurance Broker, an insurance broker in Indonesia.
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